Simla, 23rd October, 1897. Financiud Dispatch No. 129, dated the Sth August, 1807, from Her Mojei/s retary of Slate for India to the Government of India.
Lonp,—Your Excellency is aware that special envoys from the United States and the Ambassador of France have had interviews with Members of Her Maj Government in order to discus" ject of currency reform, in which the Governments of both those countries are at present much interested.
2.—The result of those discussions is that Her Majesty's Government have been asked whether, on certain conditions, the question of reopening the Indian mints, wich have been closed since 1893, would Bo take into consideration.
3.—Her Majesty's Government understand that the Cuvernments of France and of the United Star. desire to open their mints to the free coina,7¢ Of silver, as well as of gold, such silver to' be made legal tender to an unlimited amount' At & ratio of 15} of silver to 1 of gold, provided that they are satisfied they would receiv"? Such assistance from other Powers in increa."U the demand for silver as would, in opinion, justify them in such 2 policy. they propose to summon an International Conference to deal with the matter, if they are led to believe, by the preliminary inquiry which they are now undertaking, that such a Conference would arrive at any satisfactory result; and they ask whether, if their mints were opened as suggested, your Excellency's Government—would undertake to reopen concurrently the Indian mints to the free coinage of silver, and to repeal the order which made the sovereign legal tender in India. It would, in this case, be clearly understood that no action shall be taken by you until you are satisfied that the intentions and undertakings of the two Governments will -undoubtedly be carried into effect. replied that. they will consult your Excellency's Government upon these proposals, and I invite you accordingly to give them your frost careful consideration.
5.—It is argued that, on the one hand, be very great advantages woul 1d. be gained for India under an arrangement which could not fail to have the effect of raising materially the gold value of silver, and consequently of the rupee, and which, if it were maintained, would give a good prospect of a more stable ratio, when once the disturbance was over, than has been known for many years. In that case the heavy loss which is now sustained both by your Government and by all individuals who depend upon a silver currency for payment of liabilities contracted in gold, would, in all likelihood, disappear; and'holders of rupee values would benefit greatly by the increased command of sterling values which such a change would necessarily give them. may be the benefits which it hes conferred, 6.—The present system, however great
may appear to be one of artificial and arbitrary restriction, which is thought by some to have an injurious effect on the course of trade, and the fact of its removal would have the advantage of leaving the expansion and contraction of the currency to the natural forces of the market. I believe, moreover, that your Excellency will agree with me in thinking that the maintenance of the exchange value of the rupee at a point considerably above the intrinsic value of the silver which it contains is not without inconvenience, and that a policy which without lowering exchange would restore the rupee to a value practically unmodified by mint regulations, has much to recommend it.
'7.—On the other hand, there-are certain objections which will readily occur to your Excellency, such as the disturbance and coi dislocation' of trade which might: perhaps follow a great alteration in the rate of exchange, and the possibility, however, remote, that the value of the rupee, measured in commodities in India, would be so far enhanced as to cause discontent by increasing seriously the amount payable as taxation.
8—A more serious question, in my opinion, is whether the combination of only two Governments, even though the countries which they represent are as important financially as France and the United States, is sufficient to give such reasonable promise of stability and perminence to an_ arrangement of this nature ti as would justify India in facing the undeniable risks and inconveniences attaching to such a change in her system of currency. No doubt, however, the ce clusions to be formed on this aspect of the question must in part depend on the terms of the arrangement made between the Governments concerned.
9.—In conclusion, I will remind your Excellency that in 1892 the policy of closing the mints was only recommended by your Excellency's predecessor in Council on the ground that international arrangement, similar to that which is now contemplated, was not then obtainable. This is clearly stated in the Letters of Lord Lansdowne's Government, dated the 23rd of March and Bist of June, 1892, and I shall be glad to learn whether your Excellency sees any reason to modify the views therein expressed, and, if s0, on what grounds.
10.—The question involves issues of such magnitude that I cannot ask your Excellency to reply to this dispatch without taking such time as you may require for full deliberation and confidential discussion. As, however, it is important that Her Majesty's Government should, as soon as possible, be in a position to give an answer to the French and American representatives, T trust that you will at once undertake the consideration of the matter, and that you will let me know your views without any unnecessary delay.
Text read from the printed page and cleaned; old type leaves the occasional error.